* High U.S. prices expected to continue to hurt demand

* Traders await U.S. government export data due on Thursday

* U.S. farmers' plantings progress in line with 2013

NEW YORK, April 15 (Reuters) - Cotton futures dropped on Tuesday as traders liquidated long positions because of concerns that high prices will continue to hurt demand.

The most-active July cotton contract on ICE Futures U.S. closed down 0.99 cent, or 1.1 percent, at 91.29 cents a lb.

The front-month May contract fell in stride, finishing the day down 0.99 cent, or 1.1 percent, a 89.92 cents a lb.

"At these levels, U.S. cotton is not competitive with cotton in China," said John Flanagan of Flanagan Trading Corp in North Carolina.

Beijing last month cut prices for bales sold from China's huge state reserves, stoking worries over demand for foreign fiber in the world's top consumer. Import demand has been voracious since Beijing launched a government stockpiling program in 2011.

"People are trying to gauge the market. You might be able to see technical support, but at the end of the day, if cotton isn't selling to end-users, then prices are too high," Flanagan said.

Traders eyed weekly U.S. export data due on Thursday after last week's report showed cotton export sales fell for the first time since June 2012.

Bargain-hunting on price dips and worries over waning demand have kept cotton prices volatile in recent sessions.

In late March, concerns over tight inventories in the United States propelled the second-month to a two-year high of 96.76 cents a lb, and the May contract, then the benchmark, to 97.35 cents a lb.

The U.S. Agriculture Department this month cut its outlook for inventories by the end of July in the world's top exporter to the lowest since the 1990/91 crop year.

But U.S. farmers are expected to boost acres for fiber about 7 percent this year due to higher prices.

U.S. farmers had planted 8 percent of their expected cotton acres in the week ending April 13, weekly U.S. government data showed on Monday after the market closed.

That was in line with the prior year, but lagged the prior five-year average.

(Reporting by Chris Prentice; Editing by Tom Brown)